Fitch Reports U.S. Oil Refining Makes a Comeback in '03

BW5544 JUN 03,2003 6:52 PACIFIC 09:52 EASTERN

( BW)(NY-FITCH-RATINGS/OIL) Fitch Reports U.S. Oil Refining Makes a Comeback in '03

    Business Editors

    NEW YORK--(<a href=www.businesswire.com>BUSINESS WIRE)--June 3, 2003--The downstream sector of the U.S. oil industry rebounded in early 2003 as the cold winter, the general strike in Venezuela, the war in Iraq, and a strong demand for gasoline and distillates, resulted in refined product inventories plummeting during the first quarter of the year, according to an article titled 'U.S. Downstream Rebound in 2003?', published in the latest Fitch Ratings Oil & Gas Insights quarterly newsletter.

    Distillate demand was more than 10% higher than last year, averaging at a record 4.3 million barrels per day (mmbpd) during the first quarter. 'As the U.S. enters the summer driving season, refiners are running at near full throttle (more than 94% capacity and 15.8 mmbpd of throughput) to capture the historically strong summer margins,' says Bryan Caviness, Director, at Fitch. 'The key issue to sustaining the strong margins seen in the first quarter, is the refining sector's ability to control production.'

    In the new article, Fitch notes that sharp volatility continues to affect the downstream sector. 'The 2003 summer driving season will again be a critical period for the refining sector,' says Caviness. The remainder of 2003 is expected to be at mid-cycle or better as refiners begin investing the capital to meet the low-sulfur gasoline regulations in 2004 and diesel regulations in 2006. 'Looking forward into 2004, gasoline imports will be a key issue with the ultra low sulfur gasoline regulations. With nearly 40% of gasoline imports in the form of blending components and a significant percentage of refiners not required to meet similar specifications domestically, we expect a significant drop in gasoline imports in 2004.'

    The Oil & Gas Insights newsletter is published quarterly and can be found on the Fitch Ratings web site at 'www.fitchratings.com'. Other articles published in this issue of the newsletter include, 'Hydrocarbon Prices Remain Firm in 2003,' and 'Drilling and Services Activity Increases in 2003.'

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CONTACT: Fitch Ratings
         Bryan Caviness, +1-312-368-2056
         Matt Burkhard, +1-212-908-0540 (Media Relations)

KEYWORD: NEW YORK
INDUSTRY KEYWORD: BANKING BOND/STOCK RATINGS
SOURCE: Fitch Ratings